Holden is one of the world's oldest transport brands, being established by James Alexander Holden as an Adelaide saddlery business in 1856 before going into coach building.

The family business shifted into the new form of horsepower from 1908 and began large-scale local production of car bodies for General Motors of the US in 1917. Its famous emblem of a lion rolling a stone was an art deco-style fable of man inventing the wheel, even though the symbolism was possibly lost on later generations of petrol heads.

Holden has been owned by General Motors of the US since 1931 but has retained its image of Australianness to the end. Maybe it came from Holden being the first company to mass-produce a car in Australia in 1948, at Fishermans Bend in Melbourne. The then prime minister, Ben Chifley, was on hand to exclaim: "She's a beauty!" even though the first model, the FX, was in fact rather bulbous and plain apart from a shark-toothed chrome grille at the front.

The early Holdens came amid the rapid growth of suburbia after the second world war and local car production was fostered by bipartisan policies of protectionism for strategic local industries.

Other Holden models drove into Australian folklore. The FJ was the subject and title of a 1977 film about young men in Bankstown in western Sydney. Australian boys, and many girls, could tell the difference between an EH or an EJ, along with the HR and HD. A book explored the social history of the Kingswood (Up for Rego, by Richard Strauss), which also supplied the name for a homegrown sitcom. There were epic racetrack battles at Bathurst between the late driving legend Peter Brock and Alan Moffatt in a Falcon.

Customised panel vans such as the Sandman were turned into fetish symbols and their "meaning" was later studied in the era of pop semiotics. But the Puberty Blues surfie generation was more blunt, dubbing them shaggin' wagons, and the vans sometimes had a sticker that warned passersby not to bother knocking if they were rocking.

Then there was the Torana, which started out as a skinny little thing, but muscled up. There was the Monaro, which was always a big fast-back bruiser. And there was the Commodore, a workhorse which was first produced in 1978 and went on to be Australia's best-selling car for 15 years in row.

But the evolution of the Commodore also pointed to the reasons for the eventual demise of Holden as a local manufacturer. The quality of the Commodore improved markedly but the 2006 VE model – the first designed wholly in Australia – reportedly cost more than $1bn to develop.

The Commodore and the Falcon (produced by its great rival, Ford) were "orphans" – cars that were mostly developed and sold in a single country. The big car makers switched to so-called "global platforms" (essentially everything under the body skin such as the chassis, engine and transmission). These global platforms could underpin the production of multiple models and the development costs could be shared.

For a while, Holden did well with exports of the Commodore to the US, where it was rebadged as a Pontiac. But the global financial crisis and the costs of retiree health schemes in the US almost sank the parent company, General Motors, and a cull of its US brands included the Pontiac.

The woes of GM were a reminder that, while Holden and Ford were big wheels in Australia, they were small, branch offices of huge, multinational corporations. Head office in Detroit dictated the local production lineup up and the Australian chiefs of Holden and Ford were typically shifted after several years to other roles within the corporate empires.

Consumers switched to smaller, more fuel-efficient cars. The families who used to buy Commodores and Falcons bought sports utility vehicles instead. The old tariff walls that protected the local producers have now been cut to 5%, while free trade agreements have cut the effective tariff rate to 3.5%. The tariff rate will shrink further after the signing of the FTA with Korea, and other planned trade deals with China and Japan.

The local car maker was criticised for not making smaller cars, but big production runs are needed to make a profit. Car plants usually need to have annual output of at least 100,000 cars to be viable and Holden will make about 75,000 this year. The top selling car in Australia last year, the Mazda3, sold 44,128.

One reason for this fragmentation is that Australia has one of the most competitive new car markets in the world. For example, China has annual car sales of 28 million (47 makes and 379 models) while Australia has annual sales of 1 million with 51 makes and 344 models.This competition has been compounded by the resources boom pushing the Australian dollar beyond parity with the US. Imports were cheaper and exports dearer.

Recession-struck European car makers looked to increase exports to Australia; and, more recently, the devaluation of the yen has pushed down the price of Japanese cars.

The car plan introduced in the mid-1980s by Labor’s industry minister John Button sought to force the rationalisation of car makers and the number of models produced through lower tariffs and easing of import quotas. The aim was to improve local vehicles and boost exports as well.

As the then treasurer Paul Keating famously noted: "The shoe is designed to pinch." Indeed, and Nissan shut its Melbourne plant in 1991. Mitsubishi shut its Adelaide factory in 2008.

Yet Australia still has very advanced automotive skills, being one of only a dozen or so countries which can design a modern car from the ground up and then build it. Holden, Ford and Toyota all have advanced research and design centres in Australia, but these operations are usually located alongside manufacturing plants. Ford has said it will keep this work in Australia – which employs about 1100 engineers and designers – but it needs to have access to industry assistance which is now limited to car makers.

One of the advisers who worked on the Button plant, Nick Gruen, has argued that Australia should look to China and India to develop the auto know-how that Detroit and Tokyo were unable (or unwilling) to fully utilise. A London-based author and consultant, John Wormald, has cited the Indian-owned Jaguar Land Rover as a possible model (Chinese interests now own the collapsed Volvo group).

A journalist who has specialised in manufacturing, Peter Roberts, has argued that globalisation has delivered Australia an industry that suits the needs of foreign capital, rather than the nation. "The end-game is a de-industrialised country reliant on finance, services industries and resources extraction." Academic Roy Green has called an end to the blame game and to get on with a new strategy for manufacturing in the 21st century.

However there remains a lot of emotion swirling around the end of Holden. Its cars helped give many Australians mobility, when petrol was cheaper and times seemed freer. Its demise is an economic and political milestone, but a psychological one as well.